Flying High or Flying Bye?

Norfolk Online News had the privilege of speaking with Duane Emeny, the Chief Commercial Officer of Air Chathams. His father, Craig, started the business back in the mid-eighties. Their mission has always been about serving isolated communities. “This is why travelling to Norfolk Island resonated with Air Chatham.…because that’s part of what we do…” Here’s what he had to say:

After Covid, Air Chatham came up with the idea of using the smaller plane to make two trips a week. We thought, why don’t we do two flights a week, Monday and Thursday and maybe go to three, then four and so on. By the end of the year, we were carrying 19 passengers to NI, up to 25 coming back, so it wasn’t working out financially. We had to make the tough decision to only have one flight a week.

Norfolk is our only international destination, which comes a whole list of requirements: customs, immigration, biosecurity, you name it. All these things are important but add extra cost to the operation.

We’ve been trying to work with NI Regional Council. Initially, they hired a consultant who wrote a report, and we were given 20% discount. A few weeks ago, they said, “We’ll give you the 50% to the end of the year and then 20% discount till April”, but those fees have risen from $70.00 to $87.50 per person since the original discount.

Looking at our financial data of the past 12 months and costs attributed to the Norfolk flight/run, we’re about $250k worse off. We’ve already invested a huge amount of money and time into Norfolk. We’ve also lost a lot of money and, as a business, we can’t keep doing that.

We went to the council and said, “We know this is important, there’s a definite potential to grow the NZ market, instead of relying solely on the Australian market.” We asked for partnership, a collaboration and support; with money spent promoting in NZ. At the end of the day, we’re not carrying enough people right now, what can we do to ensure we’ll be carrying enough people tomorrow. …next season... “It’s a very expensive airport to operate from, Is there any leeway around that?”

To be honest, it was a challenging conversation. The previous GM effectively told us that we should ‘leave the route’ completely. There is no way we would base our decision on that.

The current GM reports to the appointed council administrator, who ultimately makes the decisions, which didn’t provide any results. We also reached out to the Administrator, but he wasn’t helpful either.

What inspired me was talking to Ian Kiernan and I asked him, “Do they know that Air Chatham is in the process of making decisions about exiting the route.” He replied, “No. No, we do not!” I asked him what we could do, and he said talk to the local community.

I know the weather plays an important role, but do you have specific days that Air Chatham can utilise the International Airport?

The ATR is an expensive asset that needs to be used, so you allocate it to Norfolk on a Thursday and for whatever reason, weather or otherwise, it needs to be cancelled. That aircraft was allocated somewhere else for the rest of the week. We can’t cancel other flights to enable Norfolk flight to go the next day. Instead, we try to accommodate a flight on the Saturday. We understand the inconvenience caused, but that’s the best opportunity to get the plane sorted and work through the logistics of our departure system, controls and bookings, as well as passenger processing.

Chathams is not an Air NZ or Qantas flag carrier, with people sitting behind a computer saying ‘Cancel that. Fly that. Merge that.’ We’re not like that. Obviously, there are times when we must factor the commercial side, just like any other airline. I’d be lying if I said it wasn’t an issue. Sometimes, we have to make tough decisions.

At the end of the day, you’re running a business, so you have to think like a business.

Absolutely, the weather and safety play a vital role, but the bottom line is that there is also a commercial basis. I can assure you filling the plane is not our only priority.

Our failure is that we haven’t talked enough to the community, to make them aware of our decisions, or where we see Norfolk Island in the future; our plans and hopes for this route.

Norfolk Island is a unique booking market. You’re not going to see a huge amount of growth quickly; you’ve got to do the groundwork. That’s what we’ve been telling the council. We’re throwing a bunch of sale figures at the market, to see if we can grow the market. But we need the council’s help too.

When I talked to the council, their default response is: “The Commonwealth has said we need to cover operational expenses and depreciation for repairs and maintenance on the airport.”

I’m thinking ‘Mate, there is no way in hell, you’re ever going to pay for all of that. Operational expenses, maybe, but that’s a big call.’ And the only lever they have is the per passenger price, which is already ridiculously high.

If we were looking at new route potential, based on what’s in front of us financially on Norfolk Island, we wouldn’t do it. But we made a commitment and at present, we are sticking to it.

There is absolutely no marketing specific to NZ, other than what we do. We don’t have unlimited funds to spend on marketing and it’s been challenging for us to raise awareness. A lot of people don’t even know we fly to Norfolk Island. The council are using a marketing company in Australia, focusing on that market only. The council said they could free up $35k of marketing for NZ, but it would have to be spent by the Australian agency. So, you’ve got an Australian company marketing New Zealand. They know nothing about NZ, so it’s destined to fail before it starts.

Air Chatham isn’t subsidised in any other way, whereas Qantas is subsidised by the Australian Government, which makes it easier for them to maintain their route.

I said to them, “We’re in a shit spot. I’ve been transparent and showed you all our figures. We need your help, and this is what help looks like. Waive the fees, help us with marketing. If we work together, we can get this route back up and running. We need your support. All we’re asking is for support to help us make it possible for the community and NZ visitors to travel.”

We just want to provide a service to the community. It came as a bit of a shock that the community don’t know how close they are to losing their only international connection to NZ. It could be saved, but it must be council led, with a corroboration of some sort.

As it stands right now, we are operating until April 2025. In the past, sales have dropped significantly those next few months. At this point of time, we haven’t loaded any flights into August or September 2025. We have no intention of doing so, unless we can confidently say we are supported by Norfolk Island Regional Council. We might have to make the difficult decision to stop operating. This isn’t a threat, that’s just business based on financial reality.

So, this assistance must be led by the council and not necessarily by the community, as in support of more sales? It hinges on that discount amount?

Yes. When you look at the costs involved; we already get a discount at the Auckland Airport end. We can’t tap that any further. Then you’ve got your direct operating costs, your aircrew, your fuel, your airways fees, etc. There is nothing you can do about any of those.

Border Security fees are fixed due to Australian legislation. The Regional Council is the only cost that can be adjusted. They are the only entity to be able to say, “We will waive these costs.”

If those costs drop, we have more flexibility to play with our fares. The most significant thing is to have some financial support. That would be great.

Raising awareness is a top priority and being strategic about marketing. If we do that and we operate the plane without cancelling flights, then we can build the market back up again. Eventually we wouldn’t need the discount, because that’s how marketing and collaboration works.

Have you thought of affiliating with some of the businesses here, like through a specific accommodation and, perhaps even tour operators?

Short answer is no, but it’s definitely something we could do. We would love to hear from anyone that might be interested.

When I first visited Norfolk, I went as a tourist and just loved it. I thought it was awesome, and I took a lot away from that trip. You’re so welcoming and everything is geared up to support a holiday maker on the island. Obviously, it’s managed well, the majority look after your island and respect its good intention. I was impressed.

Cherie Nobbs

Norfolk Online News

30/09/24